Semiconductor Materials Market to Approach $50 Billion in 2014

Semiconductor
Materials Market to Approach $50 Billion in 2014

By Lara
Chamness, senior manager, market analysis, SEMI

Given the industry’s anemic performance during the first part of the year, a
number of analysts have recently downgraded their 2013 semiconductor revenue
forecasts to low-single digits, while forecasting stronger growth in 2014. SEMI
believes that the semiconductor materials market will trend with the device
market, resulting in an increase of one percent this year and a seven percent increase
in 2014, resulting in a materials market approaching $50 billion in 2014.

Looking
at materials trends by region, Japan has traditionally been the largest
semiconductor materials consuming region owing to its significant fab base and
packaging presence. Over the past four years, manufacturers in the region rapidly
adopted a fab-lite strategy or have consolidated many of their fabs and
packaging plants. During this same time, companies based in Taiwan invested
heavily in advanced packaging and foundry operations.

In
the 2009 downturn, the materials market contracted 22 percent in Japan, while falling
only 12 percent in Taiwan. Immediately out of the downturn, all regional
materials markets enjoyed strong gains and by 2011the Taiwan market surged
ahead Japan, resulting in Taiwan becoming the largest semiconductor materials consuming
region in terms of revenue. Rest of World, primarily SE Asia, represents the
third largest market for semiconductor materials given the dominance of
packaging in the region. For this year and the next, Taiwan will strengthen its
lead, with Rest of World’s materials market to exceed Japan’s next year (Figure
1) due to continued strength in its packaging materials market.

It
is interesting to note that in spite of many Japanese device manufacturers
opting for a fab-lite strategy and/or consolidating, Japan still represents one
of the largest regional markets for fab materials. This should not be
surprising considering that fabs located in Japan currently account for about
22 percent of global IC fab capacity, followed by South Korea with 21 percent, Taiwan
with 19 percent and North America with 15 percent (Source: SEMI World Fab Forecast database, August 2013). As a result, the wafer fab materials market
roughly mirrors IC fab capacity (Figure 2).

Given
current growth expectations for the semiconductor market, SEMI is forecasting
that semiconductor materials will increase 1 percent this year and 7 percent in
2014. Taiwan now dominates the semiconductor materials market as the result of
its aggressive foundry and advanced packaging presence. Japan still represents
a significant portion of the global materials market owing to its historical
manufacturing strength but it is expected that Rest of World, primarily SE
Asia, will surpass the Japan market next year as the Rest of World region grows
at a stronger rate due to continued strength in its packaging materials market.

To
learn more about semiconductor materials and key market trends, register to
attend the SEMI Strategic Materials Conference, which will be held at the Santa
Clara Marriott, in Santa Clara, California on October 16-17. For more
information about SEMI, visit www.semi.org.